The Union Budget 2026–27 has placed a massive focus on railway infrastructure, creating strong long-term opportunities for railway stocks despite short-term challenges.
A record ₹2.93 trillion (tn) has been set up for railroads in the Union Budget 2026–2027, with a focus on network maintenance, modernization, and capacity development.
Railway Budget Boost and Market Impact
From rolling stock to EPC and signalling, this establishes a consistent flow of orders throughout all segments. We look at five worn-out railway stocks against this context.
🚆 Railway Budget 2026 Key Highlights
- Budget Allocation: ₹2.93 trillion
- Focus Areas: Modernization, capacity & maintenance
- Opportunities: Rolling stock, EPC, signalling
- Growth Driver: Government capex push
- Long-Term Vision: Freight & passenger expansion
- Impact: Strong order inflows for railway companies
Rail & Engineering in Texmaco
One of the major companies in the Indian railway manufacturing industry is Texmaco Rail, a member of the Adventz group. With a production capacity of 12,000 to 15,000 wagons, it is the biggest supplier of wagons to Indian Railways.
Business Overview and Expansion Plans
It creates and produces a wide variety of freight rolling stock for export markets, the commercial sector, and the government.
Additionally, Texmaco is among the biggest foundry goods exporters from India. In order to boost export quantities from 5,000 metric tons (MT) to 20,000 MT, the management is growing this division. Texmaco had a substantial order book of ₹5,660 crore as of December 31, 2025.
Strategic Reset and Future Growth
The company is now undergoing a strategic reset under the “Texmaco 2.0” plan, which aims to increase Ebitda margins and double its scale. By creating a more consistent earnings profile and diversifying revenue sources, the project aims to lessen the inherent cyclicality of the freight wagon industry.
In order to achieve this, it intends to start producing urban mobility solutions, such as metro and EMU passenger coaches. Additionally, it seeks to produce the Kavach system and propulsion systems.
Additionally, Texmaco is building a global capability center (GCC) to offer design services all over the world. It is working to finalize a joint venture (JV) with RVNL and has teamed with the German company “Hormann” to enhance its technical capabilities.
Product Diversification and Financials
It is actively changing its product mix to incorporate more export and private wagons. The steel, cement, and automobile industries are driving up demand in the private sector.
Texmaco is reorganizing its leasing division and has spearheaded the creation of two multimodal wagons, container multipurpose (CMP) and freight multipurpose (FMP), in order to take advantage of this potential. The CMP is anticipated to have strong market demand, and the FMP wagon has begun making money.
Additionally, Texmaco intends to penetrate non-rail industries including mining and the production of iron pellets. Financially speaking, reduced wagon deliveries caused revenue to drop 4% year over year (YoY) to ₹1,040 crore in Q3 FY26. While net profit fell by 17%, operating profit remained unchanged.
#2 Rail Systems in Titagarh
The only Indian firm that produces both passenger coaches and freight wagons is Titagarh. With a 25% market share in wagon production in India, it is a major force in the freight sector.
Capacity and Market Position
It can produce 12,000 wagons a year. Additionally, Titagarh designs and produces metro coaches, with an annual production capacity of 300 coaches. Through a joint venture, the corporation also contributes to the design, production, and extensive 35-year maintenance of the Vande Bharat Sleeper trains.
Currently accounting for 77% of its order book, the passenger segment is a fast expanding portion of its company. With a current order book of more than ₹10,790 crore and new joint venture orders, the passenger rail system (PRS) segment is anticipated to dominate its operations within the next two years.
Execution Growth and Margin Expansion
With a goal to establish a manufacturing pace of 20 metro cars each month in the upcoming months, the firm anticipates an increase in execution. Additionally, Titagarh is getting ready to finish the vehicle bodies for its first 16-car Vande Bharat train by the end of FY26. The first fully built train would probably be available in Q3 of FY27.
The PRS segment currently has a margin of 11–12%. Through economies of scale and backward integration, the company hopes to raise this to about 15% over the coming years.
In order to achieve this, it intends to use technology transfers from ABB to produce its own propulsion systems and parts (such as traction motors and converters). Profitability might increase as a result.
Capex, Challenges, and Outlook
In order to achieve this, it intends to use technology transfers from ABB to produce its own propulsion systems and parts (such as traction motors and converters). Profitability might increase as a result.
For the PRS section, Titagarh is also carrying out a capital expenditure of about ₹1000 crore. It is anticipated that this capital expenditure would be finished in the first part of FY27.
A mismatch and a lack of wheelsets had a short-term impact on wagon production. The business anticipates a speedy resolution to the problem. It has begun importing wheels for private wagons, and by March or April of 2026, trial manufacturing at its joint venture with Ramkrishna Forgings is probably going to start.
Indian Railways’ goal to transport 3 billion tons of freight by 2030, with a 40% stake in national logistics, is driving the segment’s continued promising long-term prospects. A steady supply of wagons is therefore required.
The business can now lease wagons to private customers after obtaining a wagon leasing license. The business is breaking into the lucrative wagon maintenance sector with this endeavor. With a ₹5 billion order book, its shipbuilding division is likewise in a great position.
Its long-term plan is to grow the company rapidly and list it separately. Financially speaking, low wagon deliveries amid wheelset shortages caused revenue to drop 5.6% YoY to ₹830 crore in Q3 FY26. The margin remained at 10%, but operating profit fell 10% to ₹0.8 billion. There was a 31% decrease in net profit.
#3 IRCON International
This Navratna central public sector enterprise’s primary business is railways, which account for 75% of its present order book. The construction of roads and highways comes in second with 18%, and other infrastructure projects with 7%.
Order Book and Revenue Trends
As of December 31, 2025, Ircon has a substantial order book worth ₹23800 crore. It received more than ₹4000 crore in new orders in the first half of FY26, and it plans to do the same in the second half.
In the face of fierce competition, the company intends to make strong bids to win fresh orders. Nonetheless, a larger margin on exports offsets the relatively modest margin here. In order to diversify, it is investigating new areas including “kavach” and hydropower projects in addition to railroads and roadways.
Financial Performance
Consolidated revenue decreased 19% year over year to ₹2,120 crore in Q3 FY26, mostly as a result of slower project execution cycles, which normally pick up speed in H2. The margin grew to 7% while operating profit rose 19.6% to ₹160 crore. The net profit reached ₹100 crore, a 16% rise.
Ircon anticipates earning between ₹10,000 and ₹11,000 crore by the end of FY26 and a comparable amount in FY27.
#4 Ramkrishna Forgings
#4 Ramkrishna Forgings anticipates profiting from the projected ₹35.3 trillion in capital expenditures that Indian Railways will make on modernization and capacity development by 2032.
Manufacturing and JV Expansion
Ramkrishna Forgings (RKFL) produces cast and forged parts. In the past, it has provided essential railway parts including bolsters and frames. Additionally, RKFL helps Indian Railways cut costs by supplying them with fully locked-in, extremely margin-complete bogie assemblies.
An annual demand of more than ₹2000 crore for these assemblies is generated by the railways passenger segment. Currently, RKFL is eligible to receive up to 60% of these orders. Titagarh Rail and RKFL have a joint venture (51:49). Indian Railways has granted this consortium a “Letter of Award” to produce and deliver forged wheels.
Production Plans and Financials
At a cost of ₹20 billion, the joint venture is establishing the second-largest forged-wheel production facility in Asia in Chennai. The facility will be able to produce 228,000 forged wheels annually. By March 2026, the trial production should start. Before mass production starts, 300 wheels must be submitted to the government for approval during this trial phase.
The JV has agreed to sell 40,000 wheels to the domestic market in FY27. RKFL intends to export high-speed rail wheels worldwide once output surpasses 100,000 wheels in FY28. RKFL also intends to explore strategic acquisitions in the railway industry in order to strengthen its position and boost wallet share per train.
Financially speaking, both domestic and foreign markets drove a 2% YoY growth in revenue to ₹1100 crore in Q3 FY26. While the margin grew to 15%, operating profit rose 29% to ₹160 crore. Increased taxes, depreciation, and interest caused net profit to drop 33.3% to ₹14 crore.
From 4.6% in FY25 to 7.3% in 9M FY26, the railway sector’s share of RKFL’s domestic revenue mix has grown dramatically. It is anticipated that this contribution will increase starting in FY27.
RKFL obtained ₹120 crore in new railway orders and ₹200 crore in railway casting orders in just 9M FY26. The management expects double-digit sales growth in the railway business over the next two years due to this strong order intake and the execution of bogie assembly work.
Overall, management estimates a comparable CAGR for the following three years and expects top-line growth of 10–15% for FY27. Additionally, a return to the historical range of 19–20% is anticipated for margin.
Over the past three years, it has acquired ₹9040 crore in fresh orders, giving multi-year revenue visibility. It is anticipated that the execution of these contracts will increase gradually, reaching ₹1310 crore in FY26, ₹2250 crore in FY27, and ₹2790 crore by FY29.
#5 RVNL
The development, modernization, and upgrading of railroads is RVNL’s primary business. It is progressively expanding into roads and highways, ports, metro systems, electrical distribution, and telecommunications. For the company, Vande Bharat trains are a long-term asset.
Expansion and Projects
In collaboration with a Russian business, RVNL intends to produce 120 Vande Bharat sleeper train sets, each with 16 cars. By June or July of 2026, the first prototype should be complete.
Additionally, it anticipates a solid cash stream from the BharatNet telecommunications project. At roughly ₹10,000 crore, top-line growth is predicted to be somewhat flat for FY26. For FY26, the corporation expects its bottom line to decline. Nonetheless, beginning in FY27, the management aims for sustainable topline and bottomline growth of roughly 10% annually.
Order Book and Financials
RVNL anticipates a balanced revenue stream for the next three years. It is anticipated that 50% will come from nomination-based railway projects totaling ₹40000 crore, with the remaining 50% coming from bidding projects such as Vande Bharat, BharatNet, roads, and other segments.
Based on FY25 revenue of ₹19,900 crore, the company has a very strong current order book of over ₹87000 crore, offering revenue visibility of about four years.
In terms of finances, revenue increased 2.5% year over year to ₹4680 crore. While the margin remained at 5%, operating profit fell 7.5% to ₹220 crore. At ₹320 crore, net profit increased by 3.8%.
Frequently Asked Questions
1. What makes railway stocks deemed worn out?
Despite high long-term demand, stocks like Texmaco Rail & Engineering and Titagarh Rail Systems experienced price pressure as a result of execution delays, margin compression, and transient supply problems.
2. What is causing railway stocks to rise?
Through significant infrastructure, modernization, and capacity development projects, government capital expenditures, particularly the ₹2.93 trillion allotment, support businesses like RVNL and IRCON International.
3. Which market has the most room for expansion?
Titagarh Rail Systems and component suppliers like Ramkrishna Forgings rely heavily on passenger rail systems, such as metro and Vande Bharat trains.
4. What are the main hazards associated with railway stocks?
Companies like Texmaco Rail & Engineering and IRCON International may be impacted by execution delays, supply chain problems (such as wheel shortages), low EPC margins, and cyclicality in wagon demand.
5. Are railway stocks a wise long-term investment?
Yes, despite short-term volatility, enterprises like RVNL and Ramkrishna Forgings provide long-term development prospects because of their robust order books and policy backing.
Conclusion
Despite short-term execution, margin, and supply issues, railway stocks like Texmaco Rail & Engineering, Titagarh Rail Systems, and RVNL promise long-term gain from capital expenditures.
Disclaimer: This content is for informational purposes only and should not be considered financial or investment advice.
